10 savings accounts may seem like a lot, but they've helped us go from scrambling to having the money we need (2024)

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• My wife and I used to scramble every time we had an irregular expenses come up, like our HOA dues.
• We realized we could save monthly for these kinds of expenses and always have the cash on hand.
• Now we have 10 "buckets" within our high-yield savings account that help us plan ahead.

Don't you hate it when expenses just sneak up on you when you're totally unprepared for them? Things like Christmas and birthdays, quarterly energy bills, and annual HOA dues.

A while back, my wife and I were in a stage of spending all our money as it came in. We could budget our income, but there always seemed to be something unexpected each month that would push us right to the edge of our paychecks and leave nothing for saving.

It was a really frustrating way to live, so when we started taking control of our finances, this was one of the first areas we addressed. We ended up putting together a strategy involving 10 high-yield savings accounts.

We use high-yield savings accounts strategically

We found that the best place to store our money for future use was a high-yield savings account where it could earn us interest while waiting to be deployed.

Some of the funds, such as the quarterly energy and water bills, are stored in our checking account since three months isn't much time to build up any interest, but the others are currently earning every day.

As it comes time to spend the money, we simply transfer it to our main checking account or set up an auto-debit. It's such a great feeling to have the money ready and available when these expenses come due, rather than our old system of scrambling to come up with the money each time or needing to work more jobs, hours, or side hustles to bring in the extra cash.

We actually have 10 different high-yield savings accounts "buckets" where we save for our different goals. We'd have more, except this was the limit per account holder!This allows us to keep track of how much we have saved for each expense and makes it easy for my wife or me to spend the money and take it from the right place.

Using a bucket system like this has allowed us to save for emergencies, pay cash for a car, take vacations every summer, pay myself a summer salary when my full-time job pay dries up, and replace appliances as they have broken without ever having to stress about where the money was going to come from.

Why not invest the money to make it grow?

We asked ourselves this question and it came back to the general rule that: If you need the money within five years, it shouldn't be invested.

This applies to anemergency fund in particular, which could be called into action at any point, but also some of our longer-term savings goals since we don't want the market to be down when we need to deploy the money.

We probably could make use of one-year bonds, but we are happy with our strategy and it's working for us to meet our goals.

How we decided how much to save each month

We started by listing all the expenses that come up annually, quarterly, or within a fixed timeframe that we could plan for ahead of time. Our list included:

• Emergencies. You don't know what they are, but you know they're coming.
• Christmas
• Our anniversary
• Birthdays for friends and family members that we planned to attend or send a gift for
• Water bill
• Electric bill
• Car maintenance
• Summer pay for me as a teacher
• Sick and vacation pay for my wife, who is self-employed
• Car replacement every five to seven years
• Home maintenance like roof replacement, appliances, and deck update
• Summer vacations

With some, the cost was clear, such as our annual HOA dues of $600. But others required some more thought.

We looked at how much we wanted to spend on things like birthdays, Christmas, and vacations to determine how much we would need to save. Energy and water bills could be estimated based on the average we spent each quarter. Each cost was divided into a monthly amount and then built into our budgeting app.

Expenses are not unexpected if they happen at the same time every year

How does something like a birthday or Christmas sneak up on you? It happens at the same time every year! The same is true for many seasonal or annual expenses. We can plan for them to happen each year and we know approximately how much they will cost. The big step for us was getting proactive and starting to account for these expenses a year in advance.

Thinking proactively instead of reactively ensured that we always had money available when an expected expense came up. We were also able to spend more on things that brought us joy and not feel guilty about spending money on things that were wants instead of needs. We realized that as long as we're meeting our financial goals and the expenses are budgeted for, it's totally fine to spend on luxuries and needs that bring us happiness and joy.

This article was originally published in October 2022.